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Sunday, 17 July 2016

Stories we should be thinking about

Ahead of the new working week here are a few finance and related stories to be thinking about.Macro matters:A (failed) Turkish coup on Friday evening. For an excellent summary read this:

Few winners, many losers but "a broad social and political alignment emerged against the attempted coup" (link here).

Of course it has implications in terms of domestic Turkish politics...

...and investment into Turkey:

Interesting to see how coups have been less successful recently:

(h/t @JFiva)

Staying with politics such a contrast between support for the new UK Prime Minister and the leader of the opposition across all age groups:

Back now to economics and the bond-equity debate. Yes, bonds have done rather well...

..but check out how bonds have struggled to continue to break-out:

(h/t @JLyonsFundMgmt)

And it is not just US Treasuries. This via Fast FT on the German bund market:

Of course certain central banks still retain the right to continue to buy back bonds...

...and event if there is a bit of a push back in bond values maybe losses will not be that high:

But for me however the attraction of equities versus bonds remains key...and finally the inflows are starting:

Of course you have to be careful with your stock picking as implied below:

(h/t @AlastairWinter)

A big week awaits and the focus will be in Europe but "the ECB is unlikely to take further action before
seeing updated inflation forecasts at its Sept. 8 meeting" (link here). Judging by what the Bank of England did not do I would agree with this.

Turning to China and I thought this was an interesting report: "Disposable household income adj for inflation rose
6.5% H116". This is good but as we saw with the big economic data dump on Friday, unless credit or investment firm there will be <5% GDP (link here).

Indicative though of the consumption growth in China is shown by this growth in car consumption:

I still think the rise and rise of the Chinese/emerging market consumer remains the most compelling structural investment theme in the world currently.

Kind of surprised that grains - including wheat prices below - have been so weak..

(h/t @Ole_S_Hansen)

...but then again warm temperatures can have this impact. Of course not the greatest news for energy markets...

And talking about heat a useful story on how hot temperatures are impacting Chinese-based businesses and government exhortations (link here):

'the government appears to be trying to raise consciousness
of the heat subsidies, not least among foreign employers who may need to pay
them to their workers'

(h/t @Jiabaochina)

Sector and companies:

Financials were much in focus at the end of the week with lots of corporate results in the sector being published...

...for me though I prefer the franchise value in areas like wealth management with names like UBS in a strong position:

Lots of other companies including financials due to report this week:

And what should you listen out for? Well interest rates, currency, Brazil and oil/gas commentary have been very popular:

A couple of stories from today's Sunday Times:

'The activist hedge fund run by Sir Chris Hohn has built a secret stake in SABMiller cranking up pressure on the brewer to revise the terms of its £77bn sale'

Discount Investment Corp. saw the biggest gain in almost
four years after entering into an accord to sell its remaining stake in Adama
Agricultural Solutions Ltd., the world’s largest maker of generic
agro-chemicals, to China National Chemical Corp who are looking to buy Syngenta of course.

And finally...

Good advice - even from a more typewritten era - on stock picking and related never goes out of fashion: